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BlockFi wallet holders object to committee’s motion for trustee or conversion
By Sarah Lizee
Olympia, Wash., July 10 – An informal group of BlockFi Inc. wallet holders objected to the official committee of unsecured creditors’ cross motion that seeks to terminate the debtors’ exclusivity periods, appoint a Chapter 11 trustee, or convert the cases to Chapter 7, according to documents filed Friday with the U.S. Bankruptcy Court for the District of New Jersey.
The group noted that when the BlockFi debtors started their cases, they stated their intent “to seek authority to honor client withdrawal requests from customer wallet accounts.”
On May 17, the court entered the order authorizing the debtors to honor withdrawals from wallet accounts and granting related relief.
Since that time, although they have not allowed the wallet holders to withdraw their assets, the debtors have reported to counsel for the wallet holders that the debtors’ platform can’t be used for withdrawals at this time because the platform is being worked on to build the functionality necessary to transact withdrawals of digital assets by holders that may be subject to potential preference claims, the group said.
On June 27, after significant administrative burn, the official committee of unsecured creditors filed the cross motion.
“At this point in these cases, it makes no economic sense to appoint a Chapter 11 trustee or convert the cases to Chapter 7,” the wallet holder group said.
“Appointment of a Chapter 11 trustee or conversion to Chapter 7 may increase the cost and almost certainly would delay the resolution of these cases.”
Based in Jersey City, N.J., BlockFi is a crypto financial services company. The company filed bankruptcy on Nov. 28, 2022 under Chapter 11 case number 22-19361.
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